Mongolia's economy showed promising signs of growth in the first quarter of 2023, according to recent statistics. Foreign trade turnover increased by a staggering 57% year-on-year to $5.7 billion USD, resulting in a surplus of approximately $1.8 billion.
The surge in exports of mining products played a significant role in this growth, with China, Switzerland, and South Korea being the top three destinations for Mongolian exports. However, the foreign trade turnover also increased by 32 percent year on year to $21 billion in 2022, which means that the growth rate in Q1 2023 was not as staggering as it might seem.
Furthermore, the largest land port on the China-Mongolia border, Erenhot, recorded a remarkable year-on-year increase of 72% in its import and export cargo throughput during the same period. The port's highway throughput also saw a surge of 250%. As a result, the port saw 156,000 exits and entries, averaging over 3,600 daily visits.
The Mongolian coal industry is also thriving, with exports reaching almost 6 million tonnes to China in March alone. Data from the Mongolian Customs General Administration shows that coal exports surged by 446% year-on-year to 13.8 million tonnes during January-March 2023, totaling $2.24 billion in export amounts during the same period.
The World Bank and the Asian Development Outlook both project that Mongolia's GDP will grow by over 5% in 2023, as mining and exports continue to expand, and the post-pandemic recovery in services persists.
Although challenges such as high inflation, debt, fiscal risks, external sector imbalances, and over-reliance on the mining sector remain, the projected growth is an encouraging sign for the Mongolian economy.
This economic growth is not only significant for Mongolia's financial health but also for its political future. The current government and Prime Minister will likely benefit from the country's economic improvements ahead of the 2024 elections. The increase in exports and trade, as well as the growth of the coal industry, may translate to increased voter support for the current administration.
Despite the challenges and potential obstacles, Mongolia's economy's upward trend in the first quarter of 2023 is a promising sign of growth and stability. With continued investment and strategic planning, the country has the potential to achieve sustained economic growth for years to come.
Amar Adiya is Editor-in-Chief of Mongolia Weekly, a newsletter in English for international audience.